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Lonesome Dove Petroleum, Inc. v. John H. Holt, 16-3467 (2018)

Court: Court of Appeals for the Eighth Circuit Number: 16-3467 Visitors: 6
Filed: May 07, 2018
Latest Update: Mar. 03, 2020
Summary: United States Court of Appeals For the Eighth Circuit _ No. 16-3467 _ Lonesome Dove Petroleum, Inc. lllllllllllllllllllll Plaintiff - Appellant v. John H. Holt; John H. Holt Oil Properties, Inc. lllllllllllllllllllll Defendants - Appellees _ No. 16-3611 _ Lonesome Dove Petroleum, Inc. lllllllllllllllllllll Plaintiff - Appellee v. John H. Holt; John H. Holt Oil Properties, Inc. lllllllllllllllllllll Defendants - Appellants _ Appeals from United States District Court for the District of North Dako
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United States Court of Appeals
          For the Eighth Circuit
      ___________________________

              No. 16-3467
      ___________________________

       Lonesome Dove Petroleum, Inc.

     lllllllllllllllllllll Plaintiff - Appellant

                         v.

John H. Holt; John H. Holt Oil Properties, Inc.

    lllllllllllllllllllll Defendants - Appellees
       ___________________________

              No. 16-3611
      ___________________________

       Lonesome Dove Petroleum, Inc.

      lllllllllllllllllllll Plaintiff - Appellee

                         v.

John H. Holt; John H. Holt Oil Properties, Inc.

   lllllllllllllllllllll Defendants - Appellants
                    ____________

 Appeals from United States District Court
 for the District of North Dakota - Bismarck
                ____________

         Submitted: October 16, 2017
             Filed: May 7, 2018
              ____________
Before SMITH, Chief Judge, and MURPHY and COLLOTON, Circuit Judges.
                               ____________

MURPHY, Circuit Judge.

       In 2004, Lonesome Dove, through its president, Brett Boedecker, formed a plan
with John Holt to take advantage of the booming oil business in the Bakken region
of North Dakota. Holt and Boedecker, along with two investors, intended to acquire
oil and gas leases in Mountrail County and sell them for a profit. After they
completed a successful round of acquisitions in 2005, Holt and the investors began
excluding Boedecker from any new acquisitions. Lonesome Dove filed this lawsuit
in 2012 and Holt moved for partial summary judgment on the following claims: 1)
breach of a joint venture contract; 2) breach of the implied covenant of good faith and
fair dealing; 3) breach of fiduciary duty; 4) civil conspiracy; 5) negligent
misrepresentation; and 6) unjust enrichment. The district court1 granted summary
judgment on all claims other than the breach of the joint venture contract, which was
later decided in Holt's favor by a jury. Lonesome Dove moved for equitable relief
and a new trial; both were denied. Lonesome Dove now appeals the summary
judgments on the negligent misrepresentation and unjust enrichment claims, as well
as the denial of equitable relief and a new trial. We affirm.2




      1
       The Honorable Ralph R. Erickson, then Chief Judge, United States District
Court for the District of North Dakota.
      2
        Holt filed a cross appeal claiming two errors by the district court: 1) the denial
of his motion for partial summary judgment on the breach of joint venture contract
claim and 2) the denial of his motion for summary judgment claiming the partners'
oral agreement was barred by the statute of frauds.
       Because we affirm the district court's judgment, we need not discuss the issues
raised on cross appeal.

                                           -2-
                                           I.

       Lonesome Dove Petroleum, Inc. ("Lonesome Dove") is a corporation which
acquires oil and gas leases and sells them for a profit. Brett Boedecker owns a
majority of the corporate shares and serves as its president. In 2004 John Holt, owner
of John H. Holt Oil Properties, Inc., contacted Boedecker about a plan to purchase
leases in Mountrail County, North Dakota. Holt and Boedecker, together with two
investors (Jim Williams and David Flinn), reached an oral agreement to obtain oil and
gas leases and sell them at a profit while retaining overriding royalty interests (ORIs).
Holt and Boedecker planned to each retain 12.5 percent of the profits.

       Except for these provisions, the parties disagree about the nature and scope of
the oral agreement. According to Boedecker, the agreement was for a joint venture
to acquire between 20,000 and 50,000 acres of land. He believed the venture would
continue in perpetuity for the purpose of procuring leases east of the Nesson Anticline
region in Mountrail and Burke Counties. He also claims that the joint venture
established fiduciary duties for the partners. Holt disagrees and claims there was only
a "limited lease play" to purchase between 20,000 and 50,000 acres in Mountrail
County.

       From August 2004 to January 2005, the four men acquired leases covering over
25,000 acres. During this time period, Boedecker received his agreed upon
percentage of the profits and ORIs. Holt, Williams, and Flinn then began acquiring
other leases in the Nesson Anticline region without involving Boedecker. Boedecker
alleges he discovered in 2011 that he had not been notified about them. He also
alleges that when he had asked Holt about acquiring additional leases, Holt had
responded that the area was too competitive and the prices were too high. Holt
contends, however, that he informed Boedecker that he would be entering new lease
plays without him and that Boedecker had not objected.



                                          -3-
       In 2012, Lonesome Dove brought the following claims against Holt in Montana
state court: 1) breach of a joint venture contract; 2) breach of an implied covenant of
good faith and fair dealing; 3) breach of fiduciary duty; 4) civil conspiracy; 5)
negligent misrepresentation; and 6) unjust enrichment. After the case was removed
to federal court, it was transferred to North Dakota.

       Holt moved for partial summary judgment on Lonesome Dove's claims outside
the limited lease play. In a separate motion, he sought summary judgment on the
statute of frauds for any claims beyond the "limited lease play." The district court
granted summary judgment on the claims for breach of implied covenant of good faith
and fair dealing, breach of fiduciary duty, civil conspiracy, negligent
misrepresentation, and unjust enrichment. Summary judgment was denied on the
claim for breach of a joint venture contract and a motion for summary judgment based
on the statute of frauds. The jury then found that a joint venture had been formed and
that Holt had not breached the agreement. Lonesome Dove moved for equitable relief
and a new trial. The district court denied both motions.

      Lonesome Dove now appeals the order granting summary judgment on the
negligent misrepresentation and unjust enrichment claims, as well as the denials of
the motions for equitable relief and a new trial.

                                          II.

                                          A.

      Lonesome Dove first contends that the district court erred in granting Holt's
summary judgment motion on Lonesome Dove's negligent misrepresentation claim.
We review the grant of summary judgment de novo. Woods v. DaimlerChrysler
Corp., 
409 F.3d 984
, 990 (8th Cir. 2005). "Summary judgment is appropriate if
viewing the record in the light most favorable to the nonmoving party, there are no

                                         -4-
genuine issues of material fact and the moving party is entitled to judgment as a
matter of law." 
Id. A party
"may not rely on mere denials or allegations in its
pleadings, but must 'designate "specific facts showing that there is a genuine issue for
trial ."'" Barge v. Anheuser-Busch, Inc., 
87 F.3d 256
, 258 (8th Cir. 1996) (quoting
Celotex Corp. v. Catrett, 
477 U.S. 317
, 324 (1986)).

       North Dakota recognizes a statutory claim for negligent misrepresentation
under N.D. CENT. CODE § 9-03-08(2). Bourgois v. Mont.-Dakota Utils. Co., 
466 N.W.2d 813
, 818 & n.6 (N.D. 1991). The statute for misrepresentation is satisfied if
a contracting party "with intent to deceive another party thereto or to induce the other
party to enter into the contract . . . [makes a] positive assertion, in a manner not
warranted by the information of the person making it, of that which is not true though
that person believes it to be true." N.D. CENT. CODE § 9-03-08.

       A claim under North Dakota's fraud statute requires "proof of actual damages
proximately caused by the misrepresentation." Northstar Founders, LLC v. Hayden
Capital USA, LLC, 
2014 ND 200
, ¶ 27, 
855 N.W.2d 614
, 626. To overcome a
motion for summary judgment, a plaintiff has "the burden of presenting the trial court
with competent evidence of actual damage and of establishing the actual damage was
proximately caused by the alleged . . . misrepresentation." Grandbois & Grandbois,
Inc. v. City of Watford City, 
2004 ND 162
, ¶ 20, 
685 N.W.2d 129
, 136.

       Lonesome Dove argues Holt made multiple misrepresentations and
nondisclosures which include: 1) falsely telling Boedecker he could no longer obtain
leases in Mountrail County because prices were too high; 2) not disclosing that he
decided to acquire additional leases with the same investors and that they no longer
wanted to work with Boedecker; 3) misleading Boedecker to think his interests were
protected and that the joint venture was continuing; and 4) not disclosing that the
joint venture had been terminated. Lonesome Dove claims that if not for these
misrepresentations Boedecker would have pursued other opportunities in the region.

                                          -5-
       The district court did not err in granting Holt's summary judgment motion on
the negligent misrepresentation claim because Lonesome Dove had not alleged any
specific damage from the misrepresentation. Lonesome Dove provided no evidence
of any specific opportunities it had forfeited or economic losses it had incurred due
to Holt's statements or omissions. Lonesome Dove also stated no facts to show how
Holt's statements proximately caused it detriment. Holt himself had presented
evidence that Flinn and Williams would have refused to work with Boedecker on any
additional acquisitions regardless of any misrepresentations. Since Lonesome Dove
presented no facts illustrating any specific losses proximately caused by Holt's
statements, there is no genuine issue of material fact regarding damages.

       Lonesome Dove also contends that Holt created an inventory list which
incorrectly indicated that Lonesome Dove had been assigned its share of ORIs in
leases obtained in Burke County even though Holt never had paid Boedecker. Holt
admits these leases were included in the original oral contract. It is undisputed that
in 2015 Holt corrected this mistake by paying Boedecker, and Lonesome Dove has
submitted no evidence of damages since he was reimbursed. Without specific
evidence of damage, Lonesome Dove failed to meet its burden of proof at the
summary judgment stage. The district court correctly granted Holt's motion.3

                                         B.

      Lonesome Dove argues the district court also erred by granting Holt's motion
for summary judgment on its unjust enrichment claim. Our review is de novo.


      3
        On appeal, Lonesome Dove raises certain claims for the first time, including
constructive fraud (under N.D. CENT. CODE § 9-03-09) and deceit (under N.D. CENT.
CODE § 9-10-02). Even if these claims had not been waived, they would fail because
they lacked factual showings of damages. See § 9-03-09 (requiring "misleading
another to the other's prejudice" for constructive fraud); § 9-10-03 (requiring proof
of damages for deceit).

                                         -6-

Woods, 409 F.3d at 990
. In North Dakota, a plaintiff must establish five elements to
establish unjust enrichment: "1) an enrichment, 2) an impoverishment, 3) a
connection between the enrichment and impoverishment, 4) absence of a justification
for the enrichment and impoverishment, and 5) an absence of a remedy provided by
law." Markgraf v. Welker, 
2015 ND 303
, ¶ 23, 
873 N.W.2d 26
, 34. A plaintiff may
only bring an unjust enrichment claim in the absence of a contract. BTA Oil
Producers v. MDU Res. Grp., Inc., 
2002 ND 55
, ¶ 37, 
642 N.W.2d 873
, 884.

      On its unjust enrichment claim, Lonesome Dove argues that Boedecker
provided labor to the joint venture, brought the partners together, maintained
confidentiality, and refrained from competing with the joint venture. Since the jury
determined at trial that the parties formed a valid joint venture contract, Lonesome
Dove had "a remedy provided by law" to recover any benefits unjustly retained by
Holt. 
Markgraf, 873 N.W.2d at 34
.

       Lonesome Dove alleges, however, that it provided benefits to Holt after the
contract was terminated, but it does not present any specific facts to illustrate any
benefit to Holt other than the list of things in the contract. Because Lonesome Dove
has failed to "designate 'specific facts showing that there is a genuine issue for trial,'"
the district court did not err in granting Holt's summary judgment motion. Celotex
Corp., 477 U.S. at 324
(citation omitted).

                                           C.

       Lonesome Dove also claims the district court erred by denying its motion for
equitable accounting. We review the denial of equitable relief for abuse of discretion.
Standley v. Chilhowee R-IV Sch. Dist., 
5 F.3d 319
, 322 (8th Cir. 1993). A district
court abuses its discretion if it bases its judgment on "clearly erroneous factual
findings or erroneous legal conclusions." Mathenia v. Delo, 
99 F.3d 1476
, 1480 (8th
Cir. 1996). Equitable accounting "is never ordered as a matter of course." Stuber v.

                                           -7-
Taylor, 
200 N.W.2d 276
, 280 (N.D. 1972). Instead "[t]here must be one or more of
the following: (1) a fiduciary relationship with a duty upon the confidant to render an
account; (2) a mutual or complicated account; (3) a particular need for a discovery;
or (4) some other basis for equitable jurisdiction." 
Id. "[T]he touchstone
for equity is the lack of an adequate legal remedy."
Superior, Inc. v. Behlen Mfg. Co., 
2007 ND 141
, ¶ 17, 
738 N.W.2d 19
, 26 (citation
omitted). Courts "should tread carefully when entering the realm of equitable
remedies, fashioning them only when directed to do so by statutes and court rules,
when there is no adequate legal remedy, or when the equitable remedy is better
adjusted to render complete justice." Burr v. Trinity Med. Ctr., 
492 N.W.2d 904
, 908
(N.D. 1992).

             It is a well-established principle that one partner may sue
             another in an action at law where the partnership is
             terminated and the claim sued upon is one that can be
             adjudicated without the necessity of an extensive
             accounting, as where the transactions are few and simple,
             and the items requiring adjudication are not numerous.

Zimmerman v. Lehr, 
176 N.W. 837
, 837 (N.D. 1920).

      Lonesome Dove claims it did not have an adequate remedy at law. At trial the
jury was instructed on the definition of fiduciary duty between partners in a joint
venture, including a duty

             [t]o account to the joint venture and hold as trustee for it
             any property, profit or benefit derived by the joint venturer
             in the conduct and winding up of the venture business or
             derived from a use by the joint venturer or the venture

                                         -8-
             property which would include accounting for the
             appropriation of a venture opportunity . . . .

The jury found Holt had not breached this duty. Thus, Lonesome Dove had an
adequate remedy at law in this case. The jury was instructed on the duty to account,
grounded in contract law, and the jury found the joint venture continued only through
the initial round of acquisitions. These transactions were "few and simple," and "the
items requiring adjudication are not numerous." 
Zimmerman, 176 N.W. at 837
. The
district court did not abuse its discretion by denying Lonesome Dove's motion for
equitable relief.

                                         D.

       Finally, Lonesome Dove argues the district court erred by denying its motion
for a new trial because the jury verdict was against the clear weight of the evidence.
We review such a motion for abuse of discretion. Belk v. City of Eldon, 
228 F.3d 872
, 878 (8th Cir. 2000). A district court should grant a motion for new trial based
on the sufficiency of the evidence when "the verdict is against the weight of the
evidence and allowing it to stand would result in a miscarriage of justice." Bennett
v. Riceland Foods, Inc., 
721 F.3d 546
, 553 (8th Cir. 2013) (citation omitted).

       Here, the parties presented the jury with substantial evidence on the meaning
of the joint venture, the provisions of the agreement, and the performance under it.
The evidence includes conflicting testimony from Holt and Boedecker about the
intended scope of the agreement. The verdict was thus not against the clear weight
of the evidence, and the district court did not err in denying Lonesome Dove's motion.

                                         III.

      For the reasons stated above, we affirm the judgment of the district court.
                         __________________________



                                         -9-

Source:  CourtListener

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